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MACD — Crossovers & Clear Buy / Sell Signals (Single Example)

A straightforward MACD chart: see where MACD crosses the Signal line. A red ↓ indicates a SELL (MACD crossing **below** Signal). A green ↑ indicates a BUY (MACD crossing **above** Signal).

Visual Example — MACD & Signal (Sell then Buy)

Interpretation: the red arrow marks the point where the MACD line crossed **below** the Signal line → SELL. Later the green arrow shows MACD crossing **above** the Signal line → BUY.

What kind of indicator is MACD?

MACD (Moving Average Convergence Divergence) is a momentum & trend-following indicator. It is built from the difference between a fast EMA (e.g., 12-period) and a slow EMA (e.g., 26-period). The Signal line is typically an EMA (e.g., 9-period) of the MACD itself. Crossovers of MACD and Signal indicate changes in momentum.

Pros & Cons

Pros	Cons
Easy to read crossovers — good for identifying momentum shifts. Works across timeframes, commonly-used and widely supported.	Lagging indicator — uses moving averages, so signals come after price moves. Can give false signals in choppy, sideways markets.
Shows divergence vs price which can warn of reversals. Combines momentum and trend information in one view.	Parameter sensitivity — results depend on EMA periods used. Interpretation of divergence requires experience.

Simple usage (one-liner):

• Buy when MACD crosses above Signal (confirmed momentum).
• Sell when MACD crosses below Signal (momentum fading).
• Use stop-loss, and combine with trend or support/resistance to reduce false signals.

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